Consumers this month expect inflation during the coming decade to average around 2.7%, the highest level since July 2007, the Cleveland Fed said Wednesday.
Fed officials closely track expectations for inflation, believing such sentiments can become self-fulfilling. Inflation for several months has outpaced wage gains, making affordability a front-burner political issue with the approach of the Nov. 3 mid-term elections.
The Consumer Price Index rose in September at a higher-than-forecast annual rate of 3.7%, fueled primarily by a 9.1% surge in the price of gasoline, the Bureau of Labor Statistics said Wednesday. Traders in interest rate futures on Wednesday increased the odds that policymakers will raise the main interest rate at their next meeting to 37% from 22% yesterday, according to CME Group’s FedWatch tool.
Fuel oil prices increased in September more than gasoline, soaring 15.3% during the month and 74.2% compared with September 2025, the BLS said. Higher fuel prices pushed up the price of transportation services 0.6% last month — 0.1 percentage point higher than in August — for a 2.7% gain since September 2025, according to the BLS.